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Friday, April 19, 2013

Corporations

Many of us don’t think much about the how corporations have
influenced the history of the USA.Maybe
it’s because corporations are such an integral part of our lives, like the food
we eat and the work we do and the air we breathe that it’s impossible to step
back and get perspective on what they do.While there’s a lot of books about big companies like U.S. Steel there’s
been very little written about how the laws and court rulings have evolved that
protect as well as regulate the corporate entity.

I’ve been reading Ted Nace’s excellent book Gangs of
America: The Rise of Corporate Power and the Disabling of Democracy.Much of this post summarizes information in
Nace’s book.Another excellent book
about the development of corporations is Thom Hartmann’s Unequal Protection: How Corporations Became
“People” - and How You Can Fight Back.

Maybe there’s not much discussion about corporations because
the corporate presence is so pervasive and all powerful in our lives that we’d
rather not think about it.That’s too
bad because when people tune out and sit in front of the television they are
barraged with yet more corporate messaging.We accept the relentless message from the media and our elected leaders
that whatever is good for corporations must by extension be good for the rest
of us.

It was later in my life when I finally took a course on how
corporations operate.I was one of those
college students who entered college when the Vietnam war was going full out.It’s hard to describe the anger of those
times, but there was the widespread belief then, as there is now, that the
people in power were dismissive, arrogant, even contemptuous of the rest of us.I dropped out of college.I wanted to work with my hands where I could
see the results of my efforts.I wanted
something that made sense, because few of the possible career paths that
college was preparing me for made much sense.After a few decades I got tired of barely making enough to live on.I went back to college, got a degree in
science and then a job with a Fortune 500 company as a medicinal chemist.That was when I got a real education.

What I found out at the big pharma company was this:big corporations hold the power in this
country.Government works for big
business.Simple as that.All the hair on fire rhetoric about big
government running our lives somehow ignores the elephant in the room –
corporate power.

There’s been a movement called the Tea Party that wants, among
other things, a return to the days of tri-cornered hats, when we had a “free
market.”I’ll just say that there’s no
such thing as a totally free market, never was, any more than there’s such a
thing as a football game with no officials.Markets always need a set of rules, or guidelines, in which they
function.In medieval times some of
those rules were laid down by the Church, but later that function went to
government.And of course in recent
times we have been seized by the notion that big business will establish its
own guidelines.

The background for the early citizen’s attitude about
corporations begins with the East India Company.Not only was it the largest corporation in
the world for 200 years, it was more powerful than any nation on earth.It’s quarter million man army, mostly sepoys,
was twice the size of Great Britain’s.It conducted it’s own criminal trials and had it’s own jails.It controlled the Indian subcontinent with a
brutality that surpassed any country with dreams of empire and literally bled
the place dry.

The East India Company pioneered the raising of capital by
joint-stock offerings to third party investors.The East India Company also became a separate entity from its owners,
giving it’s owners limited liability for the actions of the company.These are two of the essential elements of a
modern corporation.

The colonists in America had their own experiences with the
East India Company.In 1772 Europe went
through a depression and the company was sitting on a 3 year supply of tea in
its warehouses.The company came up with
a plan to dump the tea on the American colonies at a very low price,
undercutting in price the supply of tea brought in by Dutch smugglers to the
colonies at the time.The plan didn’t
stop there.The British governors in the
colonies were to appoint local consignees – think nepotism - to sell the tea, sidestepping
the network of American merchants .It
was a case of a vertically integrated large corporation pushing out the local
merchants with the support of government, in this case the British government.

Much has been made about the injustice of taxation without
representation, but that was not the impetus for the Boston Tea Party.The merchants of the colonies were not about
to let a the East India Company take away their livelihood.They formed a raiding party, boarded three
ships in Boston Harbor and emptied most of their tea into the water.It wasn’t just symbolic either.When they were finished 90,000 pounds of tea
was in the water, 8% of Americans yearly consumption of tea.

From a handbill distributed prior to the Tea Party:

“The East India
Company, if they once get Footing in this (once) happy country, will leave
no Stone untruned to become your Masters. . . They have a designing, depraved,
and despotic Ministry to assist and support them.They themselves are well versed in TYRANNY,
PLUNDER, OPPRESSION andBLOODSHED.Whole
Provinces labouring under the Distresses of Oppresion, Slavery, Famine, and the
Sword, are familiar to them. Thus they have enriched themselves, ­-thus they
are become the most powerful Trading Company in the Universe. . .”

The Boston Tea Party was a revolt by local merchants to stop
a large and abusive corporation backed by the British government from
destroying their livelihoods.Up until
that time the colonists relationship with the British government had been an
uneasy but working relationship.The
British had repealed many of the most onerous taxes on the colonists, who had
the knack for being quarrelsome and vocal enough to extract some concessions
from the British. Still most colonists retained
loyalty to Britain.

Fast forward and today corporations can do pretty much what
they want.Influence an election?Money is speech according to a recent supreme
court decision, and corporations have lots of money.Hide money in offshore tax havens?Not a problem.Set up holding companies and shell
corporations to gain advantages?Get
laws written for your benefit using your influence on congress?Sue a municipality that makes a regulation
you don’t like?Sue an individual who
says something you don’t like?All those
capabilities and much more are now in the corporate toolkit.

The framers of the constitution had long discussions about
how (not if) corporations should be regulated.Ben Franklin and George Washington wanted the federal government to
control certain types of corporate charters, mainly those for building canals,
roads and bridges.But the fear of another
East India Company developing from a federally chartered corporation led the
framers to delegate the issuing of charters to the states.

Synposizing from Mr. Nace’s book, here’s a list of the
typical controls that were put into corporate charters in the first half of the
19th century:

·The chartered corporation was permitted one
specific function, such as building a canal.

·The corporation had a predetermined lifespan,
usually 20 to 50 years

·Corporations could only own property that was
relevant to their function

·The amount of capital that a corporation could
control was limited

·Corporations could not own stock in other
companies

·Profits were regulated.Some charters required the corporation to buy
back stock with its profits and then convert to a public entity

·Some charters required a minimum number of
shareholders.Some charters required
unanimous consent of all the shareholders for major decisions

·Limited liability of shareholders was a
rarity.

·Activities not expressly granted in the charter
were not allowed

Yes folks those were the controls
put in place by government in the so-called free market of the early 19th
century.It’s not that the early
citizens were anti-business, that was hardly the case.Most commerce and industry at the time was in
the form of family businesses and partnerships, and the country’s economy grew
rapidly during that time.But those people
understood the dangers of a large corporation that answered to nobody, was
driven only by profits, was immortal, shielded its owners from liability for
its actions, and could hide its
activities with little accountability.

Today do most of us understand the
dangers of giving such a business entity nearly unlimited powers?Do many of us understand that the pundits and
politicians who rail against “big government” actually carry the water for
corporations that in fact actually like government as long as it does their
bidding? It's time to examine and question what role the corporation should play in our lives, and what powers "We the people" will allow those corporations to have.

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About this Blog

I moved to this place in SW Indiana in 2008. The property is six acres of woods, pasture, yard and pond. Usable garden space with full sun is limited by surrounding trees to 250 square feet of raised beds, more the size of an urban garden. I use intensive techniques: rotation of plant families, nutrient cycling, cages and trellises, row cover and cold frames to get the most out of the space.

About Me

A native Hoosier, I worked in the construction trades and later in life got a chemistry degree and worked in a research lab until retirement. I raise vegetables because they taste better and it saves money. What other hobby pays for itself? I'm a cheapskate - I won't buy new seeds until the old ones aren't any good. I'm also a bit of a lazy gardener - if I can buy the seedlings I want then why start the seeds, or if I can engineer a way to make it less work I'll do so. I also drink too much beer. But I never (well almost never) work in the garden and drink beer.